The Bank of Israel will likely be cutting its base rate of interest 2% from 2.25% when it announces its September monetary program Monday, economists predicted. Arguments in favor of a rate cut include the 0.1% increase in the July consumer price index, as well as low inflation of 1.4% during the past 12 months. A slowing economy and a worrying rise in unemployment will also likely convince the central bank that a rate cut is in order. Concerns that a lower rate will cause the shekel to weaken have mitigated over the last months as the currency has held steady. But the bank may be concerned that a rate cut will encourage the recent run-up in real estate prices. It may also be concerned by expectations among economists that inflation will accelerate to the upper end of the target rate. (Moti Bassok )

Drahi to delist HOT Telecom with offer of NIS 37 a share

French entrepreneur Patrick Drahi is offering to acquire the shares he does not already own in HOT Telecommunications in a move that would delist the company from Tel Aviv Stock Exchange trading. Drahi's Cool Holding said Sunday that it was offering shareholders NIS 37 a share for their stock, a 12.5% premium to the average price in the past month. The offer, which values HOT at NIS 2.7 billion, caused the shares to jump in TASE trading. Cool, which owns 69% of HOT, would pay nearly NIS 830 million for the stock. "Recent changes have greatly influenced investors' assessment of the sector and of HOT. We believe these changes present an opportunity for Cool, as well as risks, that can be better dealt with in a private environment," Cool said, referring to the new, competitive environment in mobile telephony. (TheMarker Staff )

Eliahu seeks loan from Harel to buy Migdal

Insurance magnate Shlomo Eliahu is seeking a loan from Harel Insurance's institutional investment units to help finance his acquisition of Migdal Insurance, sources said on Sunday, after he reached an agreement to sell the life and health insurance activities of his Eliahu Insurance for NIS 210 million to Harel. The deal will clear a regulatory hurdle for businessman Eliahu to acquire control of Israel's largest insurer, Migdal Insurance, but will help him finance the purchase. The sale is contingent on the Migdal transaction going through. In March, Italy's Generali agreed to sell a 69% stake in Migdal to Eliahu for $1.1 billion. Eliahu has a NIS 2 billion credit line from Bank Leumi. (Noam Bar )

Bank of Israel doubtful about government's tax-revenue plans

A paper by the Bank of Israel research department projected that more than a third of the NIS 14.5 billion in new taxes approved by the Netanyahu government last month will in fact never be collected. It warned that the Finance Ministry and Prime Minister's Office had to act quickly to make up for the shortfall, which will reach NIS 5 billion in uncollected tax revenue. If not, the paper said, the budget deficit will widen to 3.5% of the gross domestic product next year, from the 3% now projected. The cabinet plan calls for, among other things, NIS 3 billion in revenues from taxes on multinational corporations and another NIS 2 billion from stepped-up collection efforts, two sources the central bank said were likely to prove fruitless. (Moti Bassok )

Executive: Prices for dairy products will rise as raw milk costs are due to climb

Dairy prices are about to soar, an executive at one of the big milk-product companies has warned. The projection comes after the agricultural association said the controlled price of raw milk would rise between seven and 15 agorot a liter in October. "A 15-agorot rise is dramatic in a way we haven't seen in many years, and milk-product prices will rise accordingly," said the executive, who spoke on condition of anonymity. He estimated that a 15-agorot increase would add NIS 200 million to the dairy companies' milk-purchasing costs and 5% to what consumers pay for dairy products. That works out to about an extra 26 agorot for cottage cheese and 85 agorot for 500 grams of yellow cheese, he estimated. (Adi Dovrat-Meseritz )

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